While the general public may be divided over the new administration’s aggressive tariff policies, experienced CFOs understand that there will be short and long-term implications.
The recent imposition of tariffs by the Trump administration on imports from countries such as China, Canada, and Mexico has raised uncertainty about supply chains and cost structures. Here is what we know so far and some practical strategies to adapt.
The Latest Tariff Policies
Since the run-up to the 2024 election, President Trump has been adamant that he would use tariffs as a negotiating tool to shape the nation’s economic policy and promote prosperity. His administration wasted no time introducing a set of hefty tariffs on key U.S. trade partners, including China, Mexico, and Canada.
However, on April 9, 2025, Trump agreed to temporarily lower the new tariffs against most trade partners, with the exception of China. The administration threatened to raise the tariffs against China from 104% to 125%. Overall, the move had a positive impact on domestic and global markets, but it also reinforced existing feelings of uncertainty.
In light of this shaky sense of economic stability, it is wise to be prepared for a wide range of scenarios, including the reintroduction of the temporarily reduced tariffs.
Ways to Manage Tariff Policy Changes
Here are a few ways your business can prepare for current and future tariff policy changes:
Conduct a Risk Assessment
Understanding how tariffs impact your organization is step one. Begin by conducting a thorough analysis of your supply chain to identify which products or components are subject to tariffs and where they are sourced. This entails evaluating the increased costs associated with tariffs and how they will impact your profit margins.
For instance, Cracker Barrel reports that about one-third of its retail products are sourced from China. The national restaurant brand generates roughly 20% of its revenue from its retail stores, meaning that the new tariffs could have a significant impact on profitability.
Perform Scenario Planning and Financial Modeling
Next, develop multiple financial scenarios to anticipate various outcomes based on potential changes in tariff policies. This should include best-case, moderate, and worst-case scenarios. Financial modeling should incorporate factors such as increased costs, potential price adjustments, and changes in consumer demand.
Explore Supply Chain Diversification Opportunities
Reducing reliance on suppliers from countries affected by tariffs can mitigate risk. Explore alternative sourcing options in countries not subject to current tariffs or consider partnering with domestic suppliers.
This strategy not only helps in avoiding tariff-related costs but also enhances supply chain resilience. For instance, Cracker Barrel is negotiating with current suppliers and exploring options with alternative suppliers from other countries to minimize the impact of tariffs.
Adjust Pricing
Evaluate the feasibility of passing increased costs onto customers through price adjustments. Increasing prices too much can alienate customers and drastically impact sales. However, failing to adjust pricing enough will cut into your margins and threaten business continuity.
Advocate for Policy Changes
Active participation in industry associations and policy advocacy groups can provide a platform to influence trade policies and stay informed about potential changes. Collaborating with peers and industry leaders allows CFOs to share insights and strategies and collectively advocate for favorable trade terms.
Supporting state and federal political candidates via PAC donations and campaign contributions can also help shape financial policies.
Address Internal Communication Barriers
Despite your best efforts, you will inevitably encounter some challenges amidst the tariff policy changes. Effective internal and external communication is key to adapting to these hurdles. Examine your current communication pathways and identify any barriers that may hinder information sharing across your supply chain.
Once you identify potential barriers, resolve them with policy or workflow changes and new technologies. Discuss your concerns with key trade partners and identify ways to make the flow of goods more nimble and efficient. Even a few seemingly minor communication improvements can prepare your business for tariff-related challenges.
Use Tech and Data Analytics to Eliminate Waste
Cutting out waste with AI analytics can help you minimize the need for price increases while protecting your margins. Focus on areas that will provide ROI quickly so you can build momentum and make an immediate impact on profitability.
Implementing new technologies that centralize finance and productivity data will inform decision-making and make it easier to pinpoint waste.
Wait, Watch, and Be Ready to Move
Overcorrecting is a major concern due to the current political climate. The Trump administration’s recent move to reduce new tariffs is a prime example. As such, you must have a plan to address tariff-related challenges, but you must also be wary of changing too much too soon.
With that in mind, focus on adaptations that will provide long-term value in any political climate. Policy improvements and technology upgrades can deliver strong ROI and make your organization more adaptable.
